Employee cost-sharing and the welfare effects of flexible spending accounts
By: William Jack, Arik Levinson, Sjamsu Rahardja.
Contributors: Levinson, Arik.; Rahardja, Sjamsu, 1969-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11315; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11315.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Insurance, Health -- United States -- Finance; Medical care -- United States -- Finance; Medical savings accounts -- United States; Cafeteria benefit plans -- United States
Description: "In recent years, employees have been shouldering an increasing share of the costs of employee-provided health care.  At the same time, more and more employers have been allowing employees to pay their out-of-pocket health care costs using pre-tax earnings, through tax-subsidized flexible spending accounts (FSAs).  We use a cross-section of firm-level data from 1993 to show empirically that these FSAs can explain a significant fraction of the shift in health care costs to employees, and to evaluate the welfare impact of this shift.  Correcting for selection effects, we find that FSAs are associated with insurance contracts with coinsurance rates that are about 7 percentage points higher, relative to a sample average coinsurance rate of 17 percent.  Meanwhile, coinsurance rates net of the subsidy are approximately unchanged, providing evidence that FSAs are welfare-neutral"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.